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Start an LLC in Illinois

If you’re looking for a reliable DIY guide for starting an LLC in Illinois, look no further. Below you’ll find all the information you need to launch your business and handle any associated costs. Follow each step carefully and your LLC will be established and ready to hit the ground running.

That said, the process can be complex, with various filings and costs, so if at any point you need help, you can hire an LLC formation service – they’ll take care of the paperwork so you can spend more time growing your business.

Recommended: Compare the Top LLC Services

If you’re new to the process of starting an LLC, you might also be unfamiliar with the LLC formation services that are reliable and offer great value – like ZenBusiness. As a reference point we compared them to the two most well known LLC formation services, IncFile and LegalZoom. See our comparison guides for more information:

ZenBusiness vs LegalZoom or ZenBusiness vs IncFile

 

Step 1: Name Your LLC

What’s in a name? Quite a bit, actually. Your business name is your Illinois LLC’s identity, its personality, its reputation. Find a name that sticks in customers’ minds – while conveying your brand qualities – and you’ve struck gold. A unique, memorable name can draw in new customers and keep existing ones coming back.

Your LLC name is going to appear everywhere: business cards, marketing collateral, websites, legal contracts, bank accounts, invoices, directories, and much more. So be sure that it conveys your product, service, brand, and values.

While you can (and should) be creative with your business name, there are certain state requirements that it must follow.

When choosing an LLC name, ensure that it complies with the state’s business name requirements by adhering to the following rules:

  • The name must include a term that identifies its business type, like “Limited Liability Company,” “L.L.C.,” or “LLC,”
  • It must avoid terms that designate a different business type, such as “Corporation,” “Corp.” “Incorporated,” “Inc.,” “Ltd.,” “Co.,” “Limited Partnership” or “LP.”
  • It cannot contain a word or phrase that implies that it was formed for the purpose of insurance, assurance, banking, or as a corporate fiduciary.
  • The name must only use English characters and Arabic or Roman numerals.
  • It cannot “create a connotation that is offensive to good taste and decency.”

That’s quite a few rules, and even if you follow them all, your name will still be invalid if it’s already taken, so you’ll need to confirm that yours is distinguishable from every other name reserved or registered with the Secretary of State. But what constitutes distinguishability? Making changes to the following components is not enough to differentiate a duplicate name:

  • Designators like LLC or L.L.C (New Company LLC and New Company L.L.C. are considered the same)
  • Articles (“the,” “a,” “an”) and conjunctions (“and,” “but,” “or,” etc.)
  • Contractions
  • Abbreviations
  • Verb tenses

In short, small, syntactic changes won’t cut it. Instead, you will need to make substantial changes to the name’s key words.

For Example

Consider this: your friend Fanny wants to open a flower shop in Rockford, Illinois. The name she wants, Flowers by Fanny, LLC is already in use. So she comes up with a new one: Fanny’s Florals and Design, LLC. This name is similar to the original but includes new words, distinguishing it in the Secretary of State’s records.

Determine the Name is Available

Of course, you will only need to make distinguishable changes if your name is already taken. Don’t make the mistake of ordering business cards, creating advertisements, and using a name on documents like the Articles of Organization without first confirming it’s available. Use the Secretary of State’s Corporation/LLC Search to see if there’s an existing business using your desired name.

Maybe you pegged a distinguishable name right away, or maybe it took some modifications, but either way, once you have a unique name, you can lock it down by filing a name reservation.

Optional: Name Reservation

You may have fallen in love with a particular name, but still have some preparation and paperwork to sort out before starting your LLC, and you’re worried that someone will swipe it in the meantime. To calm your nerves, you can reserve that name in Illinois for a total of 90 days.

Think about Fanny. After making her name distinguishable, she’s ready to make it official, but if she’s waiting on some paperwork to start her LLC, she can place a hold by checking to see if her name is free using a Name Availability Form, then submitting an Application to Reserve a Name with a $25 payment to:

Secretary of State

Department of Business Services

Limited Liability Division

501 S. Second St., Rm. 351

Springfield, IL 62756

There’s no online filing option, so you’ll need to use the paper application. Processing time is 10-15 days after the office receives your form. And while a name reservation is quite useful if you’re not ready to start your business, you can save time and money by skipping this step and using your desired name on the Articles of Organization (if your LLC is ready to go), which will automatically register it.

 

Step 2: Choose a Registered Agent

Fanny’s LLC is quickly taking shape, and if it’s going to operate in Illinois, she’ll need a go-between for state and legal communications. This is called the registered agent.

A registered agent is a key component of your budding LLC, handling all of its sensitive communication with the state so you don’t have to. The Illinois Secretary of State website puts it this way: the registered agent “is designated by the company as having authority to accept service of process, and will also act as the conduit for the exchange of information between the company and the Secretary of State’s office.”

Taxes, lawsuits, maintenance requirements, and more – the registered agent takes care of it all. If you had to do this yourself, it would pile additional tasks onto your already-full plate. Plus, your agent makes your business available to receive documents even when you’re out of town or away from the office. This is especially important if your physical office is outside Illinois.

But maintaining an agent isn’t just a convenience, it’s required. The Illinois Guide to Organization a Domestic LLC states “each limited liability company is required by the Limited Liability Company Act to establish and maintain a registered agent and registered office in Illinois.”

But how? Fortunately, designating an initial registered agent is easy. All you need to do is list the agent’s name and address on your Articles of Organization. After it’s accepted, your agent will be included in your LLC’s public record.

The organizer of the LLC should designate a registered agent on the Articles of Organization application.

Individual as Registered Agent

You may think that an individual registered agent would need specialized training or experience, but this isn’t the case. Anyone can serve as your registered agent, as long as they are an Illinois resident, have a physical address in the state, and are at least 18 years old.

Third parties like attorneys or consultants are wise choices that can ensure nothing falls through the cracks, but family members and friends make for equally valid agents. You can even appoint yourself, as long as you don’t mind taking on the additional responsibilities.

Registered Agent Service

It can be a lot easier, though, to use an LLC formation service like IncFile or Northwest Registered Agent, so we highly recommend it. Not only will they take care of business formation requirements, but they’ll also include a free registered agent service. Or, if you’d rather start your Illinois LLC on your own, you can use a national registered agent service to cover your agent duties.

During the life of your LLC, you may, at some point, need to change your registered agent. Perhaps you want to switch from an individual to a professional service, or maybe your existing registered agent resigns. Either way, you’ll want to make the change as soon as possible because operating without an agent on file can lead to administrative dissolution.

 

Step 3: File the Formation Documents with the State

This is where the LLC formation process kicks into high gear. Let’s check back in with Fanny.

She’s reserved her unique business name, designated a registered agent, and she’s ready to get her LLC off the ground. It’s time for Fanny to take on the most important LLC document: the Articles of Organization. This filing creates a record for Fanny’s Florals and Design, LLC with the Illinois Secretary of State, giving it the authorization to commence business in the state.

When you’re prepared to get your LLC off the ground, you can file the Articles of Organization either online, by mail, or in person. No matter which option you choose, it will cost you $150 and you can request expedited processing for an additional $100.

Online Filing

Head over to the Illinois CyberDrive filing portal, where you can complete the entire process. At the bottom of the Articles of Organization page, click “File,” and you’ll be directed through a series of steps to complete the form. Electronic submissions are automatically given expedited (24-hour) processing and charged the additional $100 fee.

 Mail

Download, complete, and print the paper application. Include your $150 payment via certified check, cashier’s check, money order, or check from an Illinois attorney or accountant. Then, send your materials to:

Secretary of State 

Department of Business Services Limited Liability Division 

501 S. Second St., Rm. 351 

Springfield, IL 62756

Expedited service isn’t available for mailed forms, so your filing will be processed in 10-15 business days.

In-Person

Or, if you live near Springfield, you have the option of hand-delivering your form and payment to the same address. Live in Chicago instead? No problem, you can also take it to:

Illinois Secretary of State

Division of Business Services

69 W. Washington St., Suite 1240

Chicago, IL 60602

If you’re in a hurry or you’d simply rather not wait the 10-15 days for standard processing, bring an additional $100 payment to ensure 24-hour expedited service.

 

Step 4: Create an Operating Agreement

The operating agreement is the framework that holds up an LLC, the vital underpinning that establishes processes for its procedures, activities, and conduct. Essentially, it serves as your company’s bylaws.

The state doesn’t legally require its LLCs to adopt operating agreements, but this doesn’t mean it’s unimportant. By creating an operating agreement, you’re entrenching procedures essential to the success and stability of your business. Not only that, but it also legitimizes your LLC to banks, courts, and government agencies while providing protection for your personal assets.

Let’s say our friend Fanny sells a percentage of her company to two other owners. Her operating agreement could stipulate how the LLC’s assets would be distributed among them in the case of dissolution. But if she decided to maintain sole ownership, the agreement could be used in court as evidence that the LLC’s assets are separate from her personal ones. These are just two examples, but the operating agreement governs everything from member duties to the tax structure.

If you’ve decided to draft an agreement, there are two ways to go about it:

  1. Write it yourself. Don’t be intimidated by this option. There are plenty of free online templates that serve as helpful guides. You can create an effective document from most of the templates out there, but we recommend this one, courtesy of Northwest Registered Agent. It’s got everything you need to draft a solid agreement.
  2. Hire an attorney. If you want to be absolutely sure that you don’t miss any important details, an attorney can write or review the agreement for you, ensuring that it complies with state law, includes all necessary information, and avoids the state’s default laws.

What are default laws?

Each state has its own set of generic, baseline laws for how LLCs should operate. These laws, however, only govern matters not included in your operating agreement. Take dissolution, for example. If your LLC ever dissolves, your operating agreement would determine what happens to its remaining assets and debts. But if you fail to include it in the agreement, the state will make that decision for you.

Because default laws are broad and not tailored to your specific business, they often aren’t in your LLC’s best interest, so it’s best to avoid them by being as comprehensive as possible in your agreement.

 

Step 5: Get an EIN

There’s simply no way to avoid taxes. In fact, it’s illegal to try, so don’t do it.

Federally, LLCs are classified as “pass-through” entities, businesses that don’t file corporate tax returns, but whose owners include income and losses on their individual returns. Still, there are certain circumstances that require LLCs to pay federal taxes, like classifying as a corporation or partnership, hiring employees, or selling merchandise. So, in Fanny’s case, if she plans on hiring additional florists and selling bouquets, she will need to apply for an EIN.

The Employer Identification Number (EIN) is a nine-digit number that the IRS will use to identify your company’s tax accounts, so if you pay any business taxes, it’s extremely important to have one. Click the “Do I need an EIN?” link on this page to see if you fall into this category. If so, apply for an EIN one of three ways:

Online

Need to get this done quick? File online – it’s by far the most efficient method. You can only complete the process between 7 a.m. and 10 p.m. EST, Monday through Friday, but you’ll receive your number immediately upon finishing the digital form. Keep in mind that you will need to provide a valid individual taxpayer number (like a Social Security Number) as part of the process.

Fax

You might prefer the feel and security of a paper form. In this case, download Form SS-4, complete it, and fax it to (855) 641-6935. You will receive your EIN within four business days.

Mail

Or, there’s always trusty postal mail. However, this is the slowest option, as processing typically takes around four weeks. If that doesn’t deter you, fill out Form SS-4 and send it to:

Internal Revenue Service Operation

Attn: EIN Operation

Cincinnati, OH 45999

Okay, so you’ve filed the Articles of Organization, designated a registered agent, adopted an operating agreement, and filed for an EIN. Time to start doing business, right? Sorry, there are a couple of additional steps you may need to take first. But don’t worry, you’re almost there!

 

Step 6: Taxes, Licensing & Income Reporting

For all intents and purposes, most LLCs will be official after completing all the prior steps. Still, it’s important for business owners like Fanny to keep looking ahead, as there are certain maintenance requirements to keep an Illinois LLC running smoothly and in good standing with the state.

Before you start doing business, create a plan for the following potential LLC requirements:

Taxes

Federal Taxes

As mentioned earlier, LLCs are almost always classified as “pass-through” entities, which means that they don’t pay income taxes directly to the federal government. That responsibility falls instead on the owners, who must include business income and losses on their personal 1040 tax returns and/or Schedule C. LLCs are flexible with tax structure, so you can choose to have yours taxed like a corporation instead. In this case, it would need to file a separate corporate tax return.

State Taxes

Your Illinois income taxes will work just like your federal ones – income will pass through to the owners’ personal returns rather than a separate corporate one.

But state taxes don’t end there. If you’ve elected to have your LLC classified as a partnership or corporation, it will owe a personal property replacement tax of 1.5% of its net income. However, if it’s classified as a sole proprietorship, the tax won’t apply.

Additional Taxes

Beyond the standard state LLC taxes, there are other circumstantial business taxes that your LLC will owe if it meets certain conditions. For example, if your LLC sells retail, it will be responsible for Sales and Use Taxes. If you hire employees, it will owe an Unemployment Insurance Tax and obtain an Unemployment Compensation Number through the Illinois Department of Labor. Further, it will need to withhold and pay a Payroll Tax. Visit the Department of Revenue website for more information.

Plus, depending on your LLC’s location, it may owe a local tax to its city, municipality, or county. Consult your local government’s website to find out.

Licensing

The Articles of Organization may have already made your business legitimate, but your LLC likely needs certain certificates and licenses before doing business.

Every Illinois LLC must register with the Illinois Department of Revenue and receive a Certificate of Registration before conducting business. There are three ways to file:

Online

Filing electronically will get the certificate in your hands the fastest. Use the MyTaxIllinois portal and your filing will be processed in 1-2 business days.

By Mail

Download and complete a paper application. Then mail it to:

Central Registration Division 

Illinois Department of Revenue

P.O. Box 19030

Springfield, IL  62794-9030

Processing will take between six and eight weeks.

In-Person

Pay one of Illinois’ regional offices a visit and you can file the necessary paperwork there.

After your application has been processed, the state will send your Certificate of Registration and Taxpayer ID Number in the mail.

Additionally, your LLC might need certain professional licensure depending on its business purpose. Our friend Fanny, for example, may need a Nursery Dealer Certification from the Department of Agriculture before opening her doors in Illinois. Check out the Department of Financial and Professional Regulation website to find out if your LLC needs any licenses.

Reporting

Once you’ve taken all the steps to start your LLC, you’ll be off and running, making deals and growing the company. But when things are moving 100 miles per hour, don’t forget that Illinois requires all of its businesses to submit one important recurring filing: the Annual Report.

Every year, your LLC must file an Annual Report by the first day of its anniversary month. The filing fee is $75 and you can request expedited processing for another $50.

Six weeks before the due date, your registered agent will receive a form in the mail, and if it’s not filed on time, your LLC will be labeled “delinquent.” Reports submitted more than 60 days late will incur a $100 penalty, and if you don’t file within 120 days of the due date, your LLC will be dissolved.

Filing online is often a more expedient option, and you can do so here. If you use a paper form, processing time is 10-15 business days with an option for $50 expedited service (24 hours). You can return your form to one of the following addresses:

Secretary of State Department of Business Services

Limited Liability Division 

501 S. Second St., Rm. 351 

Springfield, IL 62756

 

Illinois Secretary of State

Division of Business Services

69 W. Washington St., Suite 1240

Chicago, IL 60602

And we’ve come to the end. It’s a long process, and not always easy, but the reward is well worth it. If you’ve made it this far, congratulations! Your Illinois LLC is ready for takeoff. So go ahead and start with that big sale, promotional campaign, or business deal. Maybe you’ll see Fanny out there in the business world, selling her beautiful floral creations.

 

Need Help Creating Your LLC?

If you even skimmed this guide to look over the steps, you likely got a sense of how many moving parts there are when starting an LLC. Can you do it all yourself? Absolutely. We have complete confidence in you.

But if you’d rather hand it off to someone else and not have to worry about it again, we recommend using an LLC formation service. This way, you can go about your other business responsibilities with the confidence that everything will be submitted correctly and punctually.

Plus, an LLC formation service can handle maintenance items like Annual Reports, so you can take them off your to-do list. And on top of that, many services also provide a registered agent.

Sound good? Whether you know that you’ll need an LLC service or you’re just exploring your options, take a look at IncFile and Northwest Registered Agent. These are two of the top services available. And you can take our word for it because we’ve done a whole lot of research on the topic.


About Aaron Franklin

Frustrated by all the options and aggressive online sales tactics, my team and I created BestLLCServices.com to cut the clutter and bring clarity to entrepreneurs starting a Limited Liability Company. Our focus is on reviewing and comparing the top LLC formation services while also crafting free resources that help you start a business. We sincerely believe finding the right service and free information should be a simple process so you can get started with minimal friction.